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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Bon Scott who wrote (17201)	10/26/1998 9:58:00 PM
From: JGoren	Respond to of 152472

Bon Scott, I think you and Maurice both have good points. One of the concerns expressed on the thread in the past has been that perhaps other suppliers were "underbidding" to get infrastructure business, that Qcom refused to do so, and therefore it was at a competitive disadvantage. Your thoughts as to the contract decision not necessarily being only price sensitive is, of course, true. I think what is important is that Qcom has its first major direct infrastructure contract. Remember, too, if I remember correctly, the Nortel deal for a percentage of its subcontracting may have ended or is about to end. Note, also, this may be due in part to the spinoff in that Qcom is no longer also a competitor as a carrier. Finally, might I suggest one advantage you didn't mention. With the 3G standards coming on line, with the rapid move to focus on data, the carrier may believe that--because of Qcom's knowledge base--it can predict better where things are going in the future and Qcom's decisions as to the implementation may place the carrier in a better position infrastructure-wise to take advantage of future developments. In other words, Qcom could save the carrier a lot of money in upgrading by its anticipating (knowledge) what's coming next and after that. Qcom offers as a service to carriers system design; the carrier may be getting these services in the package gratis or at a reduced charge when Qcom acts as the general contractor. I am not saying this is true; I don't know, but it is something Qcom can offer in the negotiating package to offer better value overall.

To: Bon Scott who wrote (17201)	10/27/1998 12:09:00 AM
From: Maurice Winn	Respond to of 152472

Yes, but Bon, I covered that in the first paragraph! Obviously US West wouldn't want anything other that a top quality network. But if they can get it really cheap, they'll do that! Here's the first paragraph again: "While the $50m order from US West for QUALCOMM's infrastructure is good news in that it demonstrates confidence in QUALCOMM's ability to perform, which is timely encouragement given the announcement of completion of Primeco's removal of Motorola infrastructure in favour of Lucent, it doesn't mean it is all good news for QUALCOMM." I am certain that Lucent and other infrastructure suppliers who are proven able to produce high quality networks would have been competing, which means price is under pressure, which means desperation to get a contract can happen. I agree that the first thing customers look at is quality and performance. But once they are happy on that, they start screwing the price down. I've spent a lot of years negotiating contracts involving technical performance and it's the law of the market jungle. Of course, if your system has functional superiority, which QUALCOMM might well have, then you can get a lot more money. Usually a lot more than the superiority costs you to produce. Hence the ever increasing technical development at a very rapid pace in all sorts of technology. And hence the new paradigm where the sky is the limit. I'm hopeful that is the case for QUALCOMM. My point was that we don't know that from the US West contract. Now, have to catch up with all the posts! Mqurice